VerticalScope (FORA) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 15% year-over-year to $17.8 million, driven by a 22% increase in digital advertising and record 122 million MAUs, up 21% from last year.

• Adjusted EBITDA increased 9% to $7.4 million, with a margin of 42% (down from 44% last year).

• Net income reached $1.2 million, reversing a loss from the prior year, and EPS improved to $0.06.

• Free cash flow rose 7% to $6.4 million, with a conversion rate of 86%.

• The business is benefiting from robust demand for authentic user-generated content amid AI-driven shifts in user behavior.

Financial highlights

• Total Q3 revenue: $17.8 million, up 15% organically year-over-year; digital advertising revenue up 22%.

• Programmatic advertising up 36% and now 71% of ad revenue.

• E-commerce revenue: $2.1 million, down 20% year-over-year but flat sequentially; now 12% of total revenue.

• Year-to-date revenue: $49.2 million, up 14% year-over-year.

• Cash at period end: $5.8 million; net leverage improved to 1.3x from 1.5x.

Outlook and guidance

• Entered Q4 with strong momentum, expecting continued organic revenue growth in advertising and CPMs.

• Visibility to double-digit total revenue growth in Q4 and potential for low double-digit organic growth in 2025, with tuck-in M&A as an accelerator.

• MAU growth expected to continue year-over-year into Q4 and 2025.

• Plans to accelerate growth through tuck-in M&A and share buybacks, supported by strong free cash flow and reduced leverage.

• Anticipate Adjusted EBITDA margins of 40% or better in Q4.